PUB orders 5% cut to Autopac rates, raises concerns about Crown insurer’s bloated-cost IT project

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This article was published 18/12/2023 (705 days ago), so information in it may no longer be current.

The Public Utilities Board has approved a five per cent cut to Autopac rates next year, while renewing doubts Manitoba Public Insurance will deliver its long-delayed $290-million technology upgrade on budget.

Effective April 1, compulsory automobile insurance premiums will go down by five per cent overall, the independent rate-setting authority ordered Monday.

MPI had requested no changes to insurance premiums in its 2024-25 general rate application amid a government-ordered organizational review.

Consumers’ Association of Canada (Manitoba) board member Peggy Barker called the rate decision good news. The association intervened in hearings on the rate application, which concluded at the end of October.

“CAC Manitoba welcomes the five per cent rate decrease ordered by the Public Utilities Board but remains concerned about public confidence in our Crown-owned auto insurer,” Barker said in a release.

“This year’s rate hearing shed light on the costly risks MPI has taken in (information technology) project management and its struggle to control costs.”

The Crown insurance company issued a statement Monday calling the rate decrease welcome news. It is the fifth consecutive rate decrease ordered by the PUB.

“A five per cent overall rate decrease will help provide financial relief to customers across the province who continue to manage high costs of living. Providing affordable rates remains a core commitment of MPI,” the corporation said.

“A five per cent overall rate decrease will help provide financial relief to customers across the province who continue to manage high costs of living. Providing affordable rates remains a core commitment of MPI.”–MPI statement

The PUB also approved the addition of an 18th tier to MPI’s driver-safety rating scale with a 46 per cent discount, and it dismissed the auto-insurer’s request for a blanket policy framework for vehicles-for-hire.

Spending on Project Nova, the corporation’s information-technology modernization program, was a central focus of the general rate application, the PUB said.

The project, which is budgeted to cost $290 million, will eventually allow customers to make collision claims, process driver’s licence renewals and receive other basic services online.

The original business case for Project Nova in 2019 had a price tag of $106.8 million and three-year completion timeline.

The massive spike in the project’s budget has been blamed on incomplete advice from consultants initially hired to help roll out Nova and an overestimation of MPI’s ability to deliver on the program within three years.

The project is now being rolled out in phases and scheduled to be complete in 2025-26 although the nine-week strike by MPI workers earlier this year is expected to cause further delays.

“Based on the history of the project and the evidence in this (application), the board does not have confidence in MPI’s Project Nova budget,” the PUB wrote in its decision.

“Ultimately, the board is concerned that the amount may far exceed $290 million.”

According to the PUB, Project Nova remains at “high risk” of significant budget overruns and delays, and the net present value of the business case has been revised to a negative $188.9 million.

MPI also failed to engage a project governance consultant for 11 months, contrary to a previous PUB order, which the board described as a “grave concern.” Meantime, the corporation’s new board of directors and its information-technology committee does not have the experience to fully understand the complexities of the Nova project, the PUB wrote.

MPI was ordered to file significant and detailed information concerning Nova in its next general rate application.

The auto insurer said it is committed to “responsibly delivering” Nova, but did not address the PUB’s lack of confidence in the budget.

“Over the past six months, MPI has entered into a new agreement with (national accounting firm) MNP to provide governance oversight to Nova and in November, welcomed a new chief information and technology officer to provide executive leadership to the project as well as MPI’s ongoing IT initiatives,” the corporation said in its statement.

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“Under the previous government, we saw serious issues at MPI related to Project Nova. We are trying to protect ratepayers from paying the price for their mismanagement.”–Matt Wiebe, Justice Minister

Justice Minister Matt Wiebe, who is responsible for MPI, said he shares the PUB’s concerns over Nova’s costs.

“Under the previous government, we saw serious issues at MPI related to Project Nova. We are trying to protect ratepayers from paying the price for their mismanagement,” Wiebe said in a release.

“Our government and the new board at MPI will always fight to keep rates as low as possible so people can keep more money in their pockets.”

danielle.dasilva@freepress.mb.ca